In January, a Smith & Wesson sales executive was swept up in a massive FBI undercover investigation of bribery in the small arms industry and charged with violations of the Foreign Corrupt Practices Act. The sales executive allegedly attempted to bribe the representative of an African country that was taking bids for a $15 million deal to outfit that country’s presidential guard. The representative was an undercover FBI agent.

FCPA investigations have become a growth industry for the legal community, particularly those in the business of suing companies for shareholders; after filing a handful of lawsuits per year at the beginning of the decade, the Department of Justice now has about 240 such investigations underway. Win, lose or draw, they are expensive cases to sort out. In its earnings release this September, Smith & Wesson reported the investigation had already cost it a few million dollars and was hampering “international shipments” of its handguns.

Worse for shareholders is that nobody knows how expensive Smith & Wesson’s case will eventually become. Responding to analyst questions following the earnings release, CEO Golden said he couldn’t give any guidance on whether it would keep costing a few million bucks a quarter. And the company’s financials don’t paint a rosy picture were other shoes to drop.

A Smith & Wesson spokeswoman did not return requests for comment. But, while the company says it is cooperating fully with DOJ investigators and has not been charged with any violations, company filings note that this remains a possibility. “If the DOJ determines that we violated FCPA laws, or if our employee is convicted of FCPA violations, we may face sanctions, including significant civil and criminal penalties. In addition, we could be prevented from bidding on domestic military and government contracts and could risk debarment by the U.S. Department of State,” Smith & Wesson wrote in its most recent quarterly financial statement.

via Smith & Wesson lost its apocalypse opportunity – Nov. 17, 2010.